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Monday, 1 June 2015

A few macro and related thoughts today

Greece – countdown to Friday’s first IMF
repayment. Greek PM making comments in Le Monde: ‘the lack of an
agreement so far is not due to the supposed intransigent…Greek stance…it is due
to the insistence of certain institutional actors on submitting absurd
proposals and displaying a total indifference to the recent democratic choice
of the Greek people’. Ouch!

Oil - OPEC is likely to keep its output target
unchanged when it meets on Friday because the global oil market appears to be
in good shape and prices are expected to firm up from current levels, a senior
Gulf OPEC delegate told Reuters.

China – Looks like more rate cuts. As Fast FT noted, 'the
"official" PMI for the non-manufacturing sector fell from 53.4 in
April to 53.2, the lowest since December 2008. A sibling index looking at
manufacturing, China's economic engine, ticked up, but only slightly. Its score
rose to 50.2, representing marginal growth for a third straight month, but
missing forecasts'.

Factory employment dropped for the 18th month in a row...and that was not the only micro detail in the numbers which was not good. Check out the magnitude of the 'red blocks' in the May data below:

Staying with China I was struck by a graphic on the front page of today's Financial Times which highlighted the extent of the real estate overhang...even lower rates may not help sort this out fully.

Meanwhile South Korea's manufacturing PMI continued to lag as their exports suffered due to the weak Japanese yen...

...meanwhile in Japan the manufacturing PMI was at a neutral 50.0 mark. Interesting that based on this long history chart the Topix index is also close to a level of nominal resistance. Something to watch:

A final couple of charts...interesting flow data. Latam very out-of-favour (so should be taking a look?)

And finally a fascinating unprofitable IPO chart. Not the greatest signal!